Salem CRA amendment headed to council
SALEM – A proposal to make additional residential areas in the city eligible for a tax abatement on new construction is headed to city council.
The Economic Development Committee agreed Tuesday to recommend city council change the boundaries of the Community Reinvestment Area to include sections previously excluded as a way to attract more new housing, which is lacking in the city.
“I don’t see much downside to it, if any at all,” Councilman Jake Gano said.
In February, Gano brought up the idea of reviewing the CRA program so that certain housing developments shut out during the last revision in 2017 could be included.
The city is currently maxed out on revisions allowed under pre-1994 state rules and can no longer revise the CRA without having to adopt post-1994 rules, which would require negotiating with the school board on percentages and length of time for any tax breaks over 50 percent on new values for new construction.
Under the proposal, areas included in the current boundaries of the city’s CRA will remain under pre-1994 state rules, which allow for 100 percent abatements on new values for new construction for 15 years. Areas currently excluded in certain residential areas will become part of a post-1994 CRA.
Gano explained that during the last revision, the city was focused on getting people to invest in older housing, but that didn’t go as well as expected and communities near Salem are offering the bigger tax abatements on new housing construction that Salem isn’t right now.
He thanked Mayor John Berlin for all his work on the proposal, particularly the new maps. Berlin said school officials indicated being in favor of the proposal.
Julie Needs, executive director of the Sustainable Opportunity Development Center, which handles economic development activities for the city, said she was recently contacted by a developer who had people interested in building on a couple lots, but they ended up buying in Columbiana due to their CRA.
Once council agrees to go forward, Gano said a housing survey will have to be completed as part of the application process to the state, looking at areas of blight, housing stock, demographics and population.
Councilman Bob Merry said it all sounds great, but asked if there was a downside that may result in some negative response to the idea.
Berlin said someone who built 10 years ago without a tax break who lives next to a vacant lot that’s now being developed with a tax break may get upset, but housing construction is stagnant in Salem right now.
Councilwoman Cyndi Baronzzi Dickey said the time has come to do this. Time and time again, they’ve been told companies won’t move to Salem if there aren’t enough rooftops. Available housing is one of the items companies look at when deciding where to locate.
The CRA gives property owners, including residential, business and industrial, a chance to build a new structure or remodel an existing structure and get a tax break on the improved value.
According to the current program, a new eligible residence or business or industrial structure can receive a 15-year tax abatement on the value of the improvement.
For existing one or two-family dwellings, owners are eligible for a 10-year abatement on a minimum $2,500 remodeling project. For multi-family dwellings or commercial/industrial structures, they can get a 12-year abatement on a $5,000 minimum remodeling.
The boundaries of the current CRA include the entire city and any future lands annexed into the city zoned commercial or industrial, with the exception of new construction in the handful of housing developments. Structures already existing in those housing developments qualify as part of the current CRA for remodeling projects.
In other business, the committee agreed to propose council grant permission for a local company to do some feasibility studies on vacant city-owned land near the industrial park between Allen Road and Salem Parkway and possibly acquire the land if the studies are favorable for construction. The city would turn over the property to the Columbiana County land bank, which would then provide the land to the company.
The company in question is Quality Trailer, which needs to expand and needs more space. The land in question may involve a wetland.
For the next meeting, the committee plans to discuss some concerns over downtown development being affected by a lack of enforcement on some codes already on the books. The fire chief, zoning and planning inspector and law director will be invited.