Neighborhood Revitalization and Development Committee, Oct. 10, 2019

November 14th, 2019  |  Published in Observer Reports

Application to Acquire City Owned Vacant Lot at 3307 Sutton Road for Side Lot and Application to Acquire City Owned Vacant Lot at 3713 Strandhill Road for Side Lot

Both of these proposals requested permission to purchase the vacant lot next to the owner’s property for the purpose of landscaping and to use the land as a side yard or to enlarge the existing back yard.

It is important to note that both applicants met the following criteria:

1. The applicants’ property isn’t in foreclosure, they’re current in their property taxes, and have had no criminal nuisance activity complaints. They have no outstanding Housing or Zoning Code violations.

2. The applicants’ proposal is consistent with the city and neighborhood goal of expanding the size of lots in the neighborhood to enable households to have larger yards without selling their home and moving elsewhere.

3. The city has no redevelopment plans for the vacant lot.

4. Staff considers that the use of the lot as described in respective applications would be an improvement over its being maintained by the city as a vacant lot. It currently costs the city approximately $615 per year to maintain a vacant lot.

Both proposals were approved by unanimous vote.

Proposed Tax Increment Financing on Wendy’s Property

Background: The city is actively working to attract and create new economic development opportunities across the city. In the Van Aken District (VAD), the aim is to build on the current momentum of the first phase of the development. The city is proposing to use tax increment financing (TIF) as a tool to promote additional development of properties on Warrensville Center Road and Chagrin Boulevard in the greater VAD. The city is requesting that TIF be established for the demolition and construction of the new Wendy’s and wants to direct proceeds into a fund for future development activities. Specifically, this proposal is asking to approve the TIF and authorize entering into a School Compensation Agreement with the Shaker Heights City School District.

So what is a TIF?

The goal of a TIF is to generate payments in lieu of taxes (PILOTs) to pay for public infrastructure improvements that can attract or enable private development. A property subject to a TIF is exempt from real estate taxes based on the future increase in assessed valuation of the property (which results from property improvements).

When a TIF is created, it is valued at the time of the demolition (the base value). Taxes on the base value continue to be collected and distributed as if there were no TIF. The increase in the value of the property over the base value creates the increment that’s captured by the TIF. Instead of paying real estate taxes on that increment, the property owner pays PILOTs (which are put into a separate account) equal to the amount of taxes that would otherwise have been due on that increment. It is important to note that the goal is to ensure that the school district doesn’t get any less money, but actually get more.

The primary concern that was raised is that the schools rely primarily on revenue from property taxes and the city relies primarily on income taxes—and this plan “flips” the precedent. The mayor feels strongly that this is the best plan to keep the city competitive yet guarantee that this is not done at the expense of school funding.

This complicated proposal passed unanimously.

Eileen Anderson, observer

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