The city of Columbus bypassed $8.3 million in property taxes in 2013 as part of a 12-year-old effort to increase the number of people living Downtown. The neighborhood has become one of the most popular - and most expensive - in central Ohio, but the city isn't planning to eliminate the tax break for condo-minium and apartment owners.
The city of Columbus bypassed $8.3 million in property taxes in 2013 as part of a 12-year-old effort to increase the number of people living Downtown.
The neighborhood has become one of the most popular — and most expensive — in central Ohio, but the city isn’t planning to eliminate the tax break for condo-minium and apartment owners.
Instead, it has expanded it.
The Columbus City Council late last year quietly extended the break just as it was about to expire for the earliest users.
The move will allow many Downtown property owners to continue to save thousands of dollars annually in property taxes for up to five more years. Buyers of new condominiums will get the break for up to 15 years.
The bigger winners, though, are the commercial developers whose new office and industrial buildings are now eligible for the break. A company such as Nationwide Realty, for example, stands to save millions in taxes on the office buildings it is erecting in the Arena District.
For Downtown residents, the benefit is smaller but comparatively sizable.
The break allows the owner of a $1 million condominium at North Bank Park in the Arena District to pay $1,900 a year in property taxes — less than the $2,362 paid by the owner of a condo valued at $113,500 in the nearby Victorian Gate complex in the Short North.
Last year alone, nearly 1,400 owners of Downtown residential property qualified for the break — representing a combined $8.3 million in taxes that went uncollected. (In the case of condos, each unit owner benefits; with apartments, the building owner does.)
The cost of the break is worth it for the city, said Cleve Ricksecker, executive director of the Capitol South Special Improvement District, which focuses on Downtown.
“From a tax-policy standpoint, it makes perfect sense,” he said.
Ricksecker contends that it’s cheaper for a city to provide water, sewer and emergency services to its core than to new developments in outlying areas.
“Most people think, ‘If there’s so much demand for housing Downtown, why in the hell is the tax abatement needed?’??” Ricksecker said. “Because if you’re government, you want Downtown housing because it’s very inexpensive to service.”
Supporters point out that the break applies only to property improvements, not an entire property. The land under a new apartment building is still taxed, for example, but taxes on the building are abated. Likewise, renovated buildings are taxed at their pre-renovation value.
Columbus Mayor Michael B. Coleman introduced the tax break in 2002 in hopes of encouraging 10,000 people to live Downtown by 2012. (Coleman himself benefits from the tax break on his Downtown condo.)
Although the mayor fell short of his goal — about 7,000 people call Downtown home these days, nearly twice as many as in 2002 — the central city has come alive with residential construction. More than 2,700 apartments and condos have been built since 2002, and 600 apartments are under construction, with 850 more on the drawing board.
The tax break made those buildings and others possible, developers said.
“It’s not a question of putting it over the edge or sweetening the pot. It’s whether the deal works or doesn’t,” said Brett Kaufman, whose firm, Kaufman Development, is involved in two new Downtown apartment buildings: 600 Goodale, which opened last year, and 250 High, which is under construction.
“I can tell you in both cases, without the abatements, these deals do not work. They just don’t ."
Downtown boosters agree that the break has been instrumental in the revival.
“The abatement is an important factor in luring residents Downtown,” council member Zach M. Klein said. “As Downtown grows, the city of Columbus wins.”
Klein introduced the tax-break expansion in November just as the break — which carries a full benefit for 10 years — was about to expire for the earliest users. He introduced the change, he said, at the request of Steven Schoeny, director of the city Department of Development.
In addition to now encompassing commercial and industrial properties, the new guidelines extend the effective life of the break from 10 to 12 years on renovated residential buildings and from 10 to 15 years on new residential buildings.
The change came as a surprise — albeit a pleasant one — to owners of Downtown condominium units , especially those in the Exchange Urban Lofts and the Renaissance, the two complexes entering the last year of the break.
Facing a Dec. 31 deadline, owners in those buildings rushed to file applications for extensions, said Nate Caplin, a real-estate agent who specializes in Downtown condominiums and runs the website
“Every owner had to fill out a few pages of paperwork asking for an extension,” Caplin said. “It was a mess.”
The city has since changed that requirement, and the break will automatically apply to all who qualify, said Nikki Brandon, deputy director of the Development Department.
Another source of confusion centered on a provision about condominiums in historically or architecturally significant buildings receiving 15-year abatements instead of the
10 years provided under old rules. After initially suggesting that the provision applies to buildings already receiving the break, the city said it will apply only to new renovations.
That reversal, Caplin said, could lead to court action.
“They will absolutely get sued by hundreds of condo owners, and I’ll lead it,” he said. “This is worth tens of millions of dollars.”
Regardless, newer Downtown condominium owners still stand to save — or continue to save — thousands of dollars a year in taxes.
The break was so important to Karyn Montenaro when she decided to move from Westgate to Downtown in 2012 that she didn’t look at condos that didn’t qualify for it.
“The abatement was a factor for me,” Montenaro said. “It allowed me to purchase more than I would have been able to otherwise.”
Montenaro’s property-tax payment for her Downtown condominium (valued at nearly $400,000) is less than half what she paid for her Westgate home (valued at $106,000).
While shopping for their first home, Ahmed Mohyeldin and Wafa Abu Ghannam learned of the tax break from Caplin, their real-estate agent. The break helped them focus their attention Downtown after they also considered Bexley, Grandview Heights, the Short North and the Easton area.
“When we learned from Nate about the tax abatement, it was the icing on the cake,” said Mohyeldin, a neurosurgeon in residency at Ohio State University.
The couple estimate they save about $5,000 a year in taxes on their $400,000 condominium.
The abatement, in fact, has divided Downtown’s real-estate market between condos that receive the tax break and those built before the break was enacted.
Consider, for example, comparable condominiums in the Miranova complex, built in 2000, and in North Bank Condominiums, built in 2007. Both are in luxury high-rises, span about 2,000 square feet and have two bedrooms. Both are priced at about $500,000.
Property taxes on the Miranova unit are $10,573 a year; on the North Bank condo, $1,114.
Real-estate agents say some condominium buildings, such as Miranova, initially suffered against competition from similar buildings that qualified for the tax break. But they maintain that the break has generated such a tremendous interest in living Downtown that buildings without it now benefit from the higher demand.
“Originally, when that abatement came out and it was such a disparity in the marketplace, it impacted Miranova in a negative way,” said Marilyn Vutech, a partner in the HER Realtors firm Vutech & Ruff.
“But now people are choosing the building that feels right to them, and that tax abatement falls way down on the list,” she said. “I think it helped the whole Downtown market gain traction.”