Chai Risma
Throughout the time that I took Intermediate Honors Composition, I worked at a local public accounting firm preparing tax returns. For twenty hours a week, I helped figure how much individuals and businesses owed to their local, state, and/or federal governments. As this number fluctuated between refunds and six figures, I sometimes wondered about the end destination of this money and the reasoning behind it all. In my cursory search of taxation online, I found the oldest example in the University of Pennsylvania Almanac entry on “Taxes in the Ancient World”, occurring in 3000 B.C. Egypt (“Taxes”). Yes, the specific reasoning for taxation can vary with the given government—in the Ancient Egyptian case, it was imposed based on the assumption that their ruler was both head of state and god—but it seems that regardless of a society’s belief system, taxation has held a constant role in organized societies across continents and throughout time. The purpose of tax is widely understood as a necessity to fund the needs of the public and government operations. In Cincinnati, corporations and individuals have a responsibility to pay taxes just as the city is responsible to its constituents. My question then, is to ask how closely the acting parties in Cincinnati’s Over-the-Rhine (OTR) neighborhood hold to these functions and duties. Do private developers pay their share? And does the City of Cincinnati use public funds for the people who have lived on their block for generations?
To help narrow my topic of taxation and tie it into housing justice in OTR, I began my research by reading issues of the Greater Cincinnati Homeless Coalition’s Streetvibes newspaper. Here, I identified applicable key terms to help guide my search. Articles by Dr. Mark Mussman were especially relevant to the scope of my research question and included terms like corporate welfare, affordable housing tax credits, tax incentives, and tax abatement (Mussman). Regarding tax credits, taxpayers and corporations have access to tax credits on the federal, state, and local level. The Ohio Housing Finance Agency website reads that in Cincinnati, the Low-Income Housing Tax Credit (OLIHTC) program was modeled after the federal LIHTC and “allows owners of qualifying affordable rental projects to claim tax credits against state taxable liabilities over a 10-year Credit Period. These credits are then exchanged by investors and syndicators for equity to help construct or preserve affordable rental housing throughout the state” (“Ohio”). The Cincinnati Center City Development Corp. (3CDC) and other developers have used this credit among others like Historic Tax Credits and New Markets Tax Credits. 3CDC proudly displays a webpage dedicated to the community impact of their affordable housing, claiming “3CDC and its partners have developed 660 apartments in OTR, 460 (or 70%) of which are affordable units” (“AFFORDABLE”). If these developers are exempt from some of their tax liabilities because of these initiatives, what makes their projects affordable for OTR’s actual residents? When checking the qualifications to claim this credit, I was reminded of the Housing 301 discussion led by Dr. Mark that brought out issues with the existing standards for “affordable” housing. The U.S. Department of Housing and Urban Development defines an affordable housing unit as “housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities” (“Affordable”). 3CDC also uses the comparison to their market-rate units and the price of units to the Area Median Income (AMI). But as I learned with Dr. Mark and from other readings supplementing his analysis, these metrics often fail to represent the actual situations of OTR’s residents. What many developers market as “affordable” can be far from accessible for those who have lived in the neighborhood for years. In a 2020 article for the Cincinnati Enquirer, journalist Dan Horn brings up two failures of these measures: 1) that the 30 percent of income figure can still be unachievable with individuals or families’ spending burdens, e.g. student loans or childcare, and 2) there are often wide variations of income within places that share the same AMI, skewing calculations in a way that overlooks the poor. It is a frustrating reality, then, that these corporations or “non-profits” receive incentives and rewards for something they do not actually achieve.
When it comes to tax abatements, I worry that I will come to the same findings. In the 10 years from 2012 to 2022 OTR had received most Cincinnati tax abatements, totaling at 425 (Wetterich), and in 2024 is now second to Hyde Park, having increased to 470. This is city data, provided through the site CincyInsights and cited by a Cincinnati Business Courier article. But from the first few articles that popped up when searching tax abatement in Cincinnati, I found another Enquirer piece written by Horn with Sharon Coolidge citing that “four of the 41 housing projects that won city tax abatements [in 2019 charged] significantly more than the city’s median rent of $709 a month… many of the projects will charge two or three times that amount” (Horn & Coolidge). Five years later, I can only imagine that difference growing larger. The City Of Cincinnati Department Of Community & Economic Development website page for Cincinnati’s Community Reinvestment Area (CRA): Residential Tax Abatement (RTA) program states that the “program recently underwent a meaningful and extensive reform process in 2023 to make RTAs more accessible, prioritize investment in historically marginalized neighborhoods, and incentivize renovations, sustainability, historical preservation, and builds for those with low mobility” (“Residential”). It also lists the following goals: to stimulate community revitalization, retain city residents, attract homeowners, reduce development costs for homeownership and rental projects, encourage development that revitalizes the housing supply, and help Cincinnati families grow within their neighborhood. I am happy to see changes made in this direction, but our prior research does leave me with skepticism towards language that sounds good without the tangible evidence to show its outcomes. After this announcement, 91.7 WVXU writer Becca Costello wrote an article explaining the program changes and citing her previous work titled “City's residential tax abatements disproportionately benefit high-income, white neighborhoods”. That 2022 article gives some context to how these reforms may have come about; aligning with our discussions in class, housing injustice has historically impacted Black communities the hardest. Their study found “neighborhoods with the highest percentage of white residents received incentives over 7 times higher than those with the lowest percentage of white residents” and mentions an ongoing lawsuit filed by dozens of Black residents alleging the city's policies were racially discriminatory (Costello). Here I find that even more the city tax policy’s failure to serve its residents and the systemic racism that must be undone before we can truly achieve housing justice.
My last area of inquiry is to go deeper into 3CDC and its role in OTR. As a private organization that works so closely with the city government, 3CDC uses public funds and resources to finance their projects. Enquirer real estate reporter Sydney Franklin lists that this occurs through local tax increment financing district fund contributions (called TIF), local and state grants, and aforementioned credits (Franklin). I believe these streams of taxpayer money backing 3CDC makes them the most responsible to serve the communities they enter, but if this course has showed me anything, it is that this organization has only been consistently responsible for displacement, gentrification, and as put by Alice Skirtz, econocide. Taking this section of Intermediate Composition has challenged me to shift the narrative from what I’ve been taught by developers and politicians, one that pushes people out for the sake of profit, to instead look at the community belonging to these neighborhoods and their needs. I have learned eye opening histories through The People’s Movement tour and Skirtz readings, in which 3CDC indirectly and directly removes economic others in favor of a result that fits their attractive, profitable ideals. Of all the purposes of taxation, it is disheartening to realize our part in funding these actions.
From abatements to credits to government-sponsored funding, I am left to ask: what makes certain developers and private corporations exempt? Why can compliance look different when the organization has certain partnerships with the city? When I evaluate 3CDC’s work I struggle to celebrate their new initiatives or revitalized areas when considering the cost—financially, yes, but also of the lives uprooted and disregarded to make way for their plans. What we find is an organization that takes advantage of this system, creating spaces and programs for a demographic that can play for the weekend and drive back to their homes or move into luxury apartment units without looking twice at the monthly price tag. We cannot call this development when others have to watch their communities fade and disappear as if they never existed. While I knew about gentrification before I took this class, our discussions and research have shown me how gentrification and displacement actually occur. These policies and allowances make up the extensive and tragic history our city has with housing inequality and the injustices the people of OTR face today. As a taxpayer and a tax preparer, this inquiry has also helped me recognize the ethics behind my future career. If my work with business clients focuses on minimizing their tax liability, I need to ask myself if I am doing so with the right convictions. Likewise, this study has helped me reevaluate compliance work, knowing that the share of money paid out of the pockets of individuals and corporations has the potential to cause change, positive or negative, depending on who holds it in the end.
WORKS CITED
“AFFORDABLE HOUSING.” 3CDC, https://www.3cdc.org/community-impact/affordable-housing/.
“Affordable Housing.” City Of Cincinnati Department Of Community & Economic Development, 2021, https://choosecincy.com/portfolio-items/understandingaffordablehousing/.
Costello, Becca. “Cincinnati's residential tax abatement program changes Sept. 1. Here's how it will work.” 91.7 WVXU, 21 Feb. 2023, https://www.wvxu.org/politics/2023-02-21/how-cincinnati-residential-tax-abatement-program-works#question7.
Costello, Becca. “City's residential tax abatements disproportionately benefit high-income, white neighborhoods.” 91.7 WVXU, 22 June 2022, https://www.wvxu.org/2022-06-22/citys-residential-tax-abatements-disproportionately-benefit-high-income-white-neighborhoods.
Franklin, Sydney. “Cincinnati's 3CDC: What is it, what are its next projects.” The Cincinnati Enquirer, 10 Sept. 2023, https://www.cincinnati.com/story/news/2023/09/10/what-is-3cdc-in-cincinnati-where-does-3cdc-get-its-money/70257216007/.
Horn, Dan and Sharon Coolidge. “Enquirer investigation: Cincinnati gave $102M for rental housing, but little went to poor.” The Cincinnati Enquirer, 15 March 2020, https://www.cincinnati.com/story/news/2020/03/15/cincinnati-tax-breaks-dont-benefit-poor-102-million-rental-housing/5005090002/.
Horn, Dan. “What do people mean when they say 'affordable housing?' Probably not what you think.” The Cincinnati Enquirer, 11 March 2020, https://www.cincinnati.com/story/news/2020/03/11/affordable-housing-cincinnati/5005471002/#:~:text=The%20U.S.%20Department%20of%20Housing,income%20in%20rent%20and%20utilities.
Mussman, Dr. Mark. “The Collateral Damage of Corporate Welfare.” Streetvibes, vol. 28, issue 3, no. 512C, April 2024.
“OHIO LOW-INCOME HOUSING TAX CREDIT PROGRAM.” The Ohio Housing Finance Agency, https://ohiohome.org/ppd/4percent-olihtc.aspx.
“Residential Tax Abatement.” City Of Cincinnati Department Of Community & Economic Development, https://choosecincy.com/homeowner-renter-assistance/residential-tax-abatement/.
Skirtz, Alice. Econocide: Elimination of the Urban Poor. NASW Press, 2012.
“Taxes in the Ancient World.” University of Pennsylvania Almanac, vol. 48, no. 28, 2 April 2002, https://almanac.upenn.edu/archive/v48/n28/AncientTaxes.html.
Wetterich, Chris. “OTR receives most Cincinnati tax abatements since 2012: ANALYSIS.” Cincinnati Business Courier, 11 Nov. 2022, https://www.bizjournals.com/cincinnati/news/2022/11/11/cincinnati-neighborhood-tax-abatements.html.