Mayor Justin Bibb says he wants to take a tool used for Cleveland’s downtown development and put it to work in city neighborhoods.
That tool is the tax increment financing district, also known as a TIF district. City Hall created a downtown TIF district last year to support new construction in the heart of the city. Within the district, new property tax revenue helps to pay for such work as road and sewer upgrades around new projects.
On Monday, Bibb said his administration wants to try out a TIF district to encourage neighborhood housing construction. The mayor said the district would be part of the city’s effort to build modular homes, houses that are produced in factories and assembled on site.
He described it as a way for government to encourage private investment in “neighborhoods that have been forgotten.” Bibb made the comments during a panel conversation with former Secretary of Housing and Urban Development Henry Cisneros at a meeting of the National Housing Crisis Task Force at the Cleveland Foundation’s headquarters.
“This will be a really good example of us as leaders inside of City Hall being innovative about how we deploy taxing tools and new financing mechanisms to encourage more pace-based neighborhood investment,” Bibb said.
Beyond that, there aren’t many publicly available details on the neighborhood TIF district idea.
City Hall has been looking at several East Side neighborhoods for a TIF district but isn’t ready to identify them, according to Jeff Epstein, one of the mayor’s point people for development. A district could support both residential and commercial development, he said.
“The idea is, how do we use this tool to build on other investments that we’ve seen to really create a workable housing market on the East Side of Cleveland,” Epstein told reporters during a media roundtable at the conference.
He said the administration hopes to introduce legislation to Cleveland City Council later this year.
Cleveland has used tax increment financing for years to help pay for apartment buildings and commercial projects around the city. But the downtown TIF district was something new. Rather than applying to a single project, the TIF district covers a wide area between the Cuyahoga River and Lake Erie.
Council agreed to create the downtown district but pushed for a share of the proceeds to be set aside for neighborhood projects outside of downtown. Council and the administration talked about the idea of neighborhood-specific TIF districts during hearings before the Development, Planning and Sustainability Committee in 2023 and 2024.
Generally, TIFs do not change what a property owner pays in property taxes. But rather than go toward county services, the Metroparks or the Port of Cleveland, the taxes on newly created property value instead go back into the project or into infrastructure. Cleveland’s TIFs typically do not divert money from the public schools.
On Monday, the mayor pitched modular homes as a cheaper and more efficient way to build new places for people to live. The Bibb administration hopes to entice a modular home manufacturer to set up shop in Cleveland and start to fill in vacant lots with new houses.
As part of that work, the city and Habitat for Humanity will oversee the assembly of six houses in the Buckeye and Clark-Fulton neighborhoods. City Hall plans to select a winning manufacturer by the end of 2025, according to a news release. Another modular home project supported by City Council has been underway in the Collinwood neighborhood.
Asked during the media roundtable about fears of development displacing East Siders, Bibb said his administration is focused both on current residents and attracting new ones to grow the tax base.
“The work we’re contemplating with our neighborhood TIF efforts will be about making sure that those neighborhoods see more concentrated investment,” he said.
