Report: Businesses given tax breaks to move Ohio metros

7/7/2011

COLUMBUS, Ohio  — Relocations that netted small- and medium-sized businesses at least $39 million in property tax breaks to move around within the Cleveland and Cincinnati regions largely sent jobs from areas of poverty into more affluent communities, according to a study released Thursday.

In “Paid to Sprawl: Subsidized Job Flight from Cleveland and Cincinnati,” the Washington-based Good Jobs First nonprofit research center reviewed business relocations from 1995 to 2010 in the multi-county regions, finding data on 164 moves that involved an estimated 14,500 workers.

Report authors say the findings show that state officials should consider regional tax-revenue sharing and encourage regional economic-development cooperation to prevent “poaching” of companies between nearby communities. Such moves often transfer job opportunities from cities and areas with high minority populations to less diverse areas and often to sites inaccessible by public transportation, they say.

“The State of Ohio should use its enabling powers ... to encourage and reward the formation of strong regional systems that deter poaching and promote cooperation,” the report says. “The meaningful unit of competition in economic development is a metro area, not a locality.”

Cuyahoga County Executive Ed FitzGerald said an anti-poaching agreement has been proposed within the county, which includes Cleveland, to discourage fighting over companies without bringing any real growth in the economy. He hopes the idea takes off and expands elsewhere.

“The problem is that the wealthiest communities, which tend to be the communities that have a certain geographic distance form a central city, those communities have more of an ability to give incentives,” he said.

“It’s segregating wealth from poverty ... it’s pulling the tax base away from the population that needs it the most.”

The study’s authors also call for an online system that offers complete data on economic development subsidy programs and suggest that businesses receiving breaks in metro areas be required to choose locations reachable by public transportation.

A request for comment on the study’s proposals was made Thursday to the Ohio Department of Development.

The bulk of the relocations reviewed in the report — 93 percent accounting for an estimated $39.3 million in abatements — were between 1996 and 2005. The study says changes in state policy meant abatement values were not available for 2006 to 2010, but taxes were exempted on at least $37.4 million worth of property.

Report findings show that the city of Cleveland lost 11 businesses while gaining two over the 15-year period. Cincinnati lost 17 and gained 7 from 1996 to 2005.

In Cleveland, Mayor Frank Jackson works to attracts businesses from outside the Cleveland area and overseas, has appointed the city’s first chief of regional development and implemented agreements designed to discourage poaching and encourage revenue sharing, said his Chief of Staff Ken Silliman.

“Investment in urban centers like Cleveland makes good economic sense because of the ready access to the workforce, transportation and key community assets,” Silliman said.

Messages seeking comment from the city of Cincinnati were left Thursday afternoon for a representative of Mayor Mark Mallory.